In today’s briefing:
- AXXZIA (4936 JP) – TOPIX Inclusion Is Likely In February
- Mandarin Oriental (MAND SP): Life Is Suite
- Lifestyle (1212 HK)’s Scheme Gets Up
- KLCI Index Rebalance Preview: No More Glovemakers in the Index (Or How the Mighty Have Fallen)
- FTSE China 50 Index Rebalance Preview: JD Health Could Replace Xpeng
- Lifestyle International (1212 HK)’s Court Meeting – And that Is a Pass
- JD.com (9618 HK): 3Q22, Growth Recovered, Margin Reached Historical High
- Disney: Could Iger Sell to Apple?
- Honda Motor ADR: Initiation of Coverage – Recent JVs & Key Drivers
- Disney Replaces Bob Chapek with Bob Iger – Will The Magic Return at Disney?
AXXZIA (4936 JP) – TOPIX Inclusion Is Likely In February
- Just under two weeks ago, AXXZIA Inc (4936 JP) announced it had on that day (9 November) applied to move to TSE Prime from TSE Growth.
- It’s an interesting one because of the strange differential between “tradable shares” and “float.”
- After some study, I think this could be a TOPIX inclusion at end-Feb 2023, but there are steps to take between now and then.
Mandarin Oriental (MAND SP): Life Is Suite
- Hong Kong is – very gradually – rolling back Covid restrictions
- That’s a welcome relief for tourists, and for hospitality companies dependent on tourism.
- Mandarin Oriental International (MAND SP) is trading cheap at 0.7x P/B against 1.8x on average (five years) pre-Covid.
Lifestyle (1212 HK)’s Scheme Gets Up
- Independent shareholders of Lifestyle International Holdings (1212 HK) comfortably voted through the Scheme resolution.
- 94.93% of stakeholders present (and via proxy) voted FOR, with 5.07% voting AGAINST.
- The last day of trading is the 6 December with payment expected on or before the 30 December.
KLCI Index Rebalance Preview: No More Glovemakers in the Index (Or How the Mighty Have Fallen)
- Ql Resources (QLG MK) and AMMB Holdings (AMM MK) could replace Hartalega Holdings (HART MK) and Top Glove Corp (TOPG MK) in the Kuala Lumpur Composite Index (KLCI) (FBMKLCI INDEX).
- If the changes go through, glove makers will have no representation in the index. At one point in 2020, glove makers made up nearly 20% of the FBMKLCI INDEX.
- One-Way turnover at the rebalance will be around 3% and the impact of passive trading will be higher on the inclusions as compared to the deletions.
FTSE China 50 Index Rebalance Preview: JD Health Could Replace Xpeng
- At the end of the review period for the December rebalance, we see JD Health (6618 HK) replacing XPeng (9868 HK) in the FTSE China 50 Index.
- There is a very slim possibility of Longfor Properties (960) being deleted; it could be replaced with either Yum China Holdings Inc (9987) or PICC Property & Casualty H (2328).
- Short interest has stayed rangebound on JD Health (6618 HK) this year, while shorts have gone parabolic on XPeng (9868 HK) over the last few months.
Lifestyle International (1212 HK)’s Court Meeting – And that Is a Pass
- Lifestyle International Holdings (1212 HK)’s scheme resolution was approved at today’s court meeting – 94.93% of independent share votes cast FOR (2.31% of all independent shareholders AGAINST).
- This is in line with our expectations – in Lifestyle International (1212 HK)’s Wide Spread Heading into the 21 November Vote that despite the wide spread, the offer would succeed.
- At the last close and for the 30 December payment date, the gross and annualised spread to the offer is 2.0% and 20.6%, respectively.
JD.com (9618 HK): 3Q22, Growth Recovered, Margin Reached Historical High
- The revenue growth rate bounced back to 11% YoY in 3Q22.
- The operating margin improved to a historical high at 3.1%.
- We believe the stock price has an upside of 27% for year end 2023.
Disney: Could Iger Sell to Apple?
- The suprise return of Bob Iger as Disney CEO can fix certain Bob Chapek specific issues: relationships with investors, politicians, and creative types.
- But Iger faces similar intractable issues: accelerating cord cutting, a transition to a less profitable form of media distribution, and a potential recession.
- We think Iger will refocus investors on revenues/profits at Disney+ rather than subscribers, will more efficiently spend on content through decentralizing decision making… and potentially sell Disney to Apple.
Honda Motor ADR: Initiation of Coverage – Recent JVs & Key Drivers
- This is our first report on global automobile behemoth, Honda Motors.
- The Shanghai lockdown and semiconductor supply shortage resulted in a drop in unit sales and automobile production of Honda in the quarter, mainly in North America and China.
- However, despite soaring raw material costs and a drop in automobile unit sales, the sales of motorcycle units were up which led to the revenue beat.
Disney Replaces Bob Chapek with Bob Iger – Will The Magic Return at Disney?
- On 21 November, The Walt Disney Co announced that it has replaced the incumbent CEO Bob Chapek with Bob Iger who has successfully headed Disney previously for nearly 15 years.
- We believe this is a wonderful change and will have a huge impact in turning around Disney’s share price which is down nearly 50% from its peak in March 2021.
- The previous CEO Bob Chapek did not focus enough on delivery great contents. Rather, the company got involved too much in politics turning off millions of customers.
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